Penfolds Maker Benefits From Premiumisation, Particularly In Asia

By Steve Wynne-Jones
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Penfolds Maker Benefits From Premiumisation, Particularly In Asia

Treasury Wine Estates, the parent company of the Penfolds and Wolf Blass brands, has said that it plans to 'continue its premiumisation strategy' into the coming year and beyond, following strong profit growth in Asia.

The group posted a 16% increase in net profit after tax for its full year, to AU$419.5 million (€257 million), while earnings per share were up 18% to 58.4 cents.

Earnings before interest, tax, SGARA and material items (EBITS) were up 25% on a reported currency basis, to $662.7 million (€405.6 million), with EBITS margin increasing to 23.4%.

The group said that premiumisation was a key driver of performance, with net sales revenue from its Luxury and 'Masstige' segments growing 27% in the full year, and now representing 69% of group net sales revenue.

'Positive Momentum'

“I am extremely pleased to announce yet another high-quality set of financial results for our shareholders in fiscal 2019," commented Treasury Wine Estates chief executive Michael Clarke, who added that the results "confirm the positive momentum in our business which is being delivered through our premiumisation strategy, the disciplined investments we have made in our business over recent years and importantly, exceptional execution by our global team.


"While the competitive and macro-economic landscape has presented challenges for the industry in some of our key growth markets, our competitively advantaged business models and collaborative customer partnerships have enabled Treasury Wine Estates to continue delivering strong underlying growth.”

Regional Performance

Asia was the standout performer, with EBITS growing to AU$ 293.5 million and EBITS margin rising 1.7 percentage points to 39.2%. This was largely driven by the group's Luxury and Masstige portfolios, as well as 'outstanding execution', the brand said.

The Americas region reported 13% EBITS growth to AU$218.7 million and an EBITS margin of 19.3%, again driven by premiumisation, while Australia & New Zealand reported 15% EBITS growth to AU$156.5 million and an EBITS margin of 26.0%.

Europe reported 4% EBITS growth to AU$51.4 million and an EBITS margin of 14.9%, which was down 0.5 percentage points. The group's Europe performance was largely driven by 'targeted investment behind priority brands', the company said.


Market Outlook

Looking ahead, the group said that it is well-placed to 'continue the successful execution of its premiumisation strategy in [full-year 2020] and beyond', noting that its 2019 Australian vintage presents more luxury opportunities, as does its investment in French production assets.

'Further strengthening of the Company’s competitively advantaged route-to-market remains a priority, particularly in the US and Asia, both of which remain attractive markets for premium wine consumption and where TWE sees significant opportunity to continue growing a focused portfolio of brands,' it said.

© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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